Karachi, March 15, 2022 (PPI-OT): TGL: Expansion led growth

Tariq Glass Ltd (TGL) is set to embark on a high growth trajectory where we expect its 4-year sales CAGR to clock in at 15% during FY21- FY25 translating into a 4-year PAT CAGR of 23%. We expect the company to witness robust demand from the construction sector along with rapid urbanization, spurred by a growing population and aided by the company’s timely capacity expansion.

The company has invested Rs6.5bn to expand its capacity of float glass from 550TPD to 1,050TPD. The second furnace came online towards the end of 4QFY21 and has enabled the company post its record high EPS for two quarter running in 1QFY22 (EPS Rs8.4) and then in 2QFY22 (EPS Rs10.7)

TGL faces competition in the float glass segment from GHGL which has a capacity of 1,000TPD while competition in the tableware segment is much higher with entry of Ghani Glass and Deli Glass with 120TPD capacity and expansion of capacities by existing players such as Gunj Glass and BGL.

While plant closures for repair and maintenance are expected to restrict growth momentum to some extent in the near future, a major key risk to our investment thesis is the rising fuel cost, as more than one third of the direct costs pertain to fuel expenses.